While the abrupt decision by New Seasons Market to abandon their Public Market project caused concern and discussion among neighbors, Small Businesses are apparently also struggling in Emeryville. Dee Spot Cafe on 65th and Propaganda Gastropub on Adeline were the latest small business to shutter in our city. In addition, two long anticipated projects have stalled or been abandoned completely.
Dee Spot Closes Cafe
Tipsters recently pointed out that Dee Spot Cafe on 65th has closed. Dee Spot Cafe Owner Chan Vanthin confirmed that Dee Spot has closed his cafe operation and will now function as just a pop-up event space. Vanthin alluded that labor costs in tandem with the rising cost of living in our area is making it difficult to find employees that will work at the wage the position commands. “I paid my employees well above minimum wage, and provide bonus incentives if target sales are reached, and it’s still difficult to find reliable employees.”
Chan also noted the commitment it takes to run a small business like his is becoming unsustainable. He described a typical ‘140 hours per week’ that led to a recent emergency room visit citing fatigue. Chan initially reduced staff and hours to address the increasing cost of labor and flattening profits before opting to close their cafe operation for good. He noted he may reopen the cafe space if he’s able to find a business partner.
Dee Spot opened in 2016 after Vanthin purchased Farley’s Café from the prior owner who was among many small business owners who spoke against raising the minimum wage in the city to the highest in the nation. He sold the business shortly after the law went into effect after having run Farley’s at his 65th Street location for over 6 years. Dee Spot closed up shop in less than two years.
If you’re interested in their next pop up event, follow them on Facebook.
Propaganda Gastropub Closes, Sold
Propaganda also announced it’s closing its doors after opening in Emeryville’s Triangle neighborhood along 40th about two years ago.
Propaganda’s hours over the holidays were noted to be a bit erratic causing some concern. Another recent report surfaced that they has indeed closed. Owner Kiet Truong confirmed the closure over email. “I sold the bar. It’s [currently] going through escrow.”
Truong noted that the new owners will maintain the space as a restaurant and would provide an update shortly. “The new operator is still working on the changes.”
Parc on Powell Tenant withdrawals, Space again up for Lease
As previously noted on our social media channels, the leased space at Parc on Powell (rumored to be a natural pharmacy with a coffee and smoothie bar) has withdrawn from the project and the space is available for lease again. No reasons were given for their withdrawal from the project. The larger corner space designated for a restaurant has remained vacant since the completion of the project in 2015.
Adeline Collective Restaurant Stalled
Adeline Collective, a proposed cafe space on the corner of San Pablo and Adeline that we spotlighted in 2016, appears to be stalled. The proprietor faced ongoing challenges including being assessed a $36K development impact fee by the city.
“The past few months have presented several obstacles and have delayed our plans,” noted Michael Johnson when we reached out. Adeline applied for one of the recently issued Cannabis dispensary permits but was ranked low in the scoring matrix and ran up against community opposition.
Johnson noted he hasn’t completely given up and intends to meet with the city and community to solicit ideas for how best to move forward. The space has been vacant since the completion of the project in 2009.
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Is it just me, but blaming labour costs, when real estate prices and rental costs are through the roof – is looking at it the wrong way?
They both had average yelp reviews. I don’t know how much of it was bad branding or quality. There’s also the criterion that these businesses had to get by with a smaller staff because of higher labor costs and thus their service suffered.
The City effectively forced the popular Farley’s out and we got Dee Spot Cafe (a downgrade for some). In some cases, the market caused an upgrade like the closure of Basic Cafe (We got Navi Kitchen. Better quality food although more expensive).
The question for me has always been how we can best impact the lives of low-wage earners who are having a hard time making amends. What good is a $15 minimum wage if this ultimately causes business closures, smaller staffs, automation, inflation … and does nothing to lower rents?
Labor costs blow the doors off rental costs for almost every business. Rent is, by comparison, negligible.
Assume you have just 3 workers making minimum wage and you’re open 12 hours a day. With workers comp, sick leave benefits, etc, you’re paying no less than $18 per hour times 3 employees times 12 hours a day times 30 days a month or $19,440 per month just for 3 of the least skilled and often least reliable workers out there. By comparison, a stall at the Public Market (high rent), I believe will run you about $8000 a month.
The increase in the minimum wage alone for just 3 people for a month costs $8640 (more than the entire rent). And most places have a lot more than 3 people. With 6, your employees are costing a minimum of $39K a month.
Labor costs are exactly the reason businesses are dying.
The reason customer service is bad, prices outrageous, and food quality is lousy is because businesses have to cut somewhere. The business struggles to pay the high school kid wiping down tables a “living wage”, that is, enough money to support living independently in your own apartment with no roommates. He lives with his mom and needs enough money to go to prom but he’s getting paid the equivalent of $32K a year as a bus boy.
Labor costs are the killer, and Emeryville’s are the worst in the country.
You forgot to omit the part where the employees get high and or drunk the night before and call in sick.
Or they feel disrespected and lash out at customers.
Of course consumers and businesses are supposed to suck it up, or as Sarah suggests, be thankful that minimum wage earners aren’t breaking into our cars. (Martinez-Medina Kool Aid must be amazing.)
It used to be that that guy who was getting stoned the night before and coming to work got stuck at $9 per hour until he got his shit together. The employer would hire a second worker but hold on to the stoner. It was good for everyone.
The stoner slowly figured it out and got to keep his job while he learned how not to be a bonehead. The responsible employee got merit raises. The employer got a slightly useless extra employee for odd jobs and the rush. The customers got better customer service with more people working the counter when it was busy.
Now, the stoner gets a raise every year no matter what. The employer can’t train unskilled workers because they cost too much. He can’t fire the stoner because the responsible person wants $20 per hour because he shouldn’t be making the same as a stoner. The owner is already operating with half as many people as he needs. And the customer has to pay the highest prices for the worst quality food and service.
The only way it works is that enough small businesses go under, layoff their workers, and get replaced by the chains so that everyone goes to the same place.
The few businesses that remain can charge outrageous prices for mediocre food to pay a skeleton crew (= a chain). The customers don’t eat out much because it costs too much, takes too long, and isn’t very good, but when they do, they all go to Starbucks and Chipotle.
Unskilled and poor people lose their jobs. No one is willing to waste time hiring and training low skilled workers or young people. If you’re stupid enough to try to make it work, you do 100 hour weeks because you’re the only one who can make less than $16 per hour…so that the stoner can get high and show up late.
This is EXACTLY what has happened in Emeryville. Only one major chain restaurant has closed (Elephant Bar), but dozens of family run restaurants and cafes have gone out of business.
This is EXACTLY what the small, local businesses told city council would happen. The city council has made it clear that THEY DO NOT CARE. They know which side their bread is buttered on and who is buttering it. And it’s not the residents or the businesses.
If only we had more cannabis…you see, it all works out in the end.
I don’t have any perspective on the pharmacy and Adeline Collective, but as someone that gave Propaganda 3 changes on 3 separate (and spaced out) occasions my thought there is that its closing simply because it was bad.
Every time we went in the food was mediocre and the service was abysmal. I’d love to support some more gastropub-style places in Emeryville, and I hope that whatever replaces Propaganda gets the formula right!
I agree with you that Propaganda sucked. When you can’t afford to hire good employees because of the unusually high minimum wage requirement, service and food quality suffers. I believe in raising minimum wage, but the way Emeryville implemented it, suddenly making it the highest in the Bay Area almost as if they were trying to prove a point, has made the city’s small businesses suffer.
How would having a high minimum wage make it difficult to hire a good employee? Me thinks there is a fly in your logic.
Sarah, when you have a reasonable minimum wage, you pay the crappy worker $10 and the good worker $20. Both get what they deserve.
When you have a high minimum wage, you pay both $15 because you can’t afford to pay the loser $15 and the good worker $30
The loser coasts. The good workers quit and the working conditions and product are worse for everyone. Or you lay off the bad worker and keep the good worker and he makes the same as before but has to work twice as hard.
Paying people more only increases worker quality IF no one else is paying as much as you. With a minimum wage, everyone is paying the same as you are so you don’t get better workers. You just pay more for the ones you have.
So you lay some people off, and try to make do.
I don’t have a stance on this except to relay what I consistently hear from the many business owners I talk to. Every industry is different but in regarding restaurants:
While ideally you hope to hire locals, because of our housing crisis you get more inquiries from people living in areas like Fairfield/Vacaville where you might actually be able to live off of $15/hr. = more drivers into our city.
For a medium sized restaurant like The Townhouse, every $1 increase in the minimum wage (which our city has now done three consecutive years) adds about $200K in cost to their annual payroll. This is money they have to make up somewhere either by increased business, menu prices or cuts. Often these cuts happen to busboys, dishwashers and those at the bottom.
Higher labor costs are forcing more eateries toward a counter service model like Paradita did or alaMar in Oakland recently did (lower labor costs, fewer jobs).
An earlier minimum wage study by Harvard noted restaurants with mediocre reviews, like Dee Spot and Propaganda both had, are more likely too fail after wage increases. Maybe we’ll get a better restaurant as a result but there’s no guarantee that space won’t sit dark indefinitely.
I’ll also add that Americans have been pretty spoiled with cheap food prices that has largely been subsidized by low-wage migrant workers and probably a reason why we’re so wasteful with food. You often hear the figure that 40% of food is thrown away which is disgusting. Maybe higher food costs will change this, but I would expect that these higher costs might mean fewer customers and fewer restaurants.
We tried Propaganda just once. The people who worked there were nice enough. But the food was simply terrible. (I don’t know about their bar business) Just down the street, Monster Pho 2 has been great. It looks like they have a lot of business and the folks working there are nice. We usually go there for their Monster Rice a few times a month.
The whole “pay people higher wages and they will return the favor with customer service skills that will bring business tenfold” argument is a crock of ….
Customer service here (and to be fair to Emeryville) most of the Bay Area is horrendous. Surly and entitled is an apt description.
Of course, the progressive solution would be to pay everyone base $75,000 as a “livable wage.”
All you rich folk can afford $45 dollar sandwiches, $40 pizza, and $35 dry cleaning, and $30 coffee. Stop being so selfish.
$15 an hour is not nearly enough to make me kiss anyone’s backside, it mearly means I don’t have to resort to breaking into your car except near the holidays. A living minimum wage is a public good.
I didn’t say $15/hr was enough for what you suggest. Your words, not mine.
However, that’s one point minimum wage advocates consistently raise and your response confirms my point as to why I think the whole livable wage hullabaloo on that point is is just that.
And for what it’s worth, my partner is a minimum wage earner and gives his customers the respect and service they deserve.
A minimum wage that is too high is not a public good. It’s a disaster. It prevents anyone who doesn’t have $15 an hour worth of skill from working.
It’s an exclusion for poor, unskilled, and historically marginalized groups. The minimum wage was originally introduced in the US to keep black workers out of white union jobs. It succeeded. The minimum wage is used to block some people from working (the poor, young, and unskilled) in order to raise wages for others (the unions).
Today, if you can’t deliver at least about $20 in value every hour (enough to pay you $15, plus taxes, benefits, and hopefully make a tiny margin for the employer), you are barred from working.
And you are barred not just from one job, but from all jobs for your entire life. This creates a class of people who have to break into cars for a living because no employer can afford to hire them. No matter how much potential they have, an employer who hires them loses money. If the minimum wage were $150K per year, how many of us would have jobs? Do you see all those tents? That’s where you go when you’ve been priced out of the workforce.
Don’t forget people don’t want to make the effort to do go about their lives, including eating out or shopping, in a town where you’ll likely get robbed and victimized.
Anyway who cares. City Council’s making sure we are “intervening” so that crime is eradicated. Just wait for the fruits of their labor in around the year 2040 or maybe even 2400.
Also don’t forget you’ll see changes to the homelessness and needles when we finally listen to them and “start thinking collectively about a solution.”
City Council will remind you to thank them for all their selfless effort in a few years when they are in Sacramento or wherever job they are using Emeryville to pad their resume.
[…] month, we noted that Propaganda Gastropub had abruptly shuttered along with other announcements. Propaganda Owner Kiet Truong confirmed that he had sold the bar, but the new owners would be […]
Never great to hear about places closing down. I live around the corner from Dee Spot and work from home so the only feedback I can give is when comparing the coffee and lunch available at Paradise Cafe, Tribu or Homegrown they were all far better than what Dee Spot offered. I tried Dee Spot a few times but always ended up at the other locations.
I can only think that the better competition ran them out of business as Dee Spot is surrounded by offices with young workers and startups between 65th, San Pablo and Hollis.
Probably worthwhile contacting the other locations to see if the minimum wage is affecting them? Places like the Prizefighter are still busy until 2am each night.